This week in Indian law: The Supreme Court reversed NCLAT on Byju's insolvency withdrawal. A 9-judge Constitution Bench ruled states can regulate industrial alcohol. The SC struck down caste-based prison labour rules. Three Priority 1 rulings in an exceptionally productive week. 12 significant legal developments this week across corporate insolvency and constitutional rights.
Top story
SC Reverses NCLAT Order on Byju's Insolvency Withdrawal
Category: corporate-insolvency | Date: 1 October 2024 | Source: Supreme Court of India
The Supreme Court reversed the NCLAT order that had allowed Byju's parent company Think & Learn to withdraw from CIRP proceedings, restoring the original NCLT insolvency order. The Court held that Section 12A of the Insolvency and Bankruptcy Code, which permits withdrawal from insolvency proceedings, requires the approval of 90% of the Committee of Creditors — the applicant cannot unilaterally exit the process.
Why it matters: This reinforces the creditor-driven nature of the IBC framework and establishes that once CIRP is admitted, the debtor cannot withdraw without overwhelming creditor support. IBC practitioners handling contested withdrawals must ensure rigorous COC approval compliance.
Read more: Veritect analysis
Court judgments
9-Judge Bench: States Can Regulate Industrial Alcohol
Court: Supreme Court of India | Bench: 9-judge Constitution Bench | Date: 1 October 2024
In a significant federalism ruling, the Bench held by an 8:1 majority that states retain legislative competence to regulate industrial alcohol under Entry 8 of List II of the Seventh Schedule. This is the second major 9-judge Bench federalism verdict this year (after the mineral rights ruling in July), further strengthening states' regulatory autonomy.
Key point: The ruling strengthens states' regulatory powers over a significant industrial sector and limits the Union's claim of exclusive regulatory authority over industrial alcohol through the Industries (Development and Regulation) Act.
SC Strikes Down Caste-Based Prison Labour Rules
Court: Supreme Court of India | Date: 3 October 2024
The Supreme Court struck down prison manual provisions that assigned types of labour to inmates based on their caste, holding that such rules violate Article 17 (abolition of untouchability) and Article 23 (prohibition of forced labour). The Court extended the anti-untouchability principle to institutional settings.
Key point: Prison reform practitioners should note that Article 17's reach now extends into institutional labour assignments — any caste-based differentiation in prisons is unconstitutional.
Legislative and policy developments
No significant legislative developments this week. Parliament was not in session.
Regulatory updates
No major regulatory circulars beyond the IBBI amendments noted last week.
Also this week
- October 1 double landmark — Two major SC rulings delivered on the same day: Byju's insolvency and industrial alcohol, making October 1 the most consequential single day of the SC's October 2024 term.
- Byju's CIRP continues — Following the SC ruling, the CIRP process resumed with the resolution professional continuing to manage the company.
- States assess industrial alcohol impact — Industrial alcohol manufacturers review state-level regulatory compliance following the federalism ruling.
- Prison reform momentum — Human rights organisations highlight the caste-based prison labour ruling as a milestone for institutional rights.
- CJI countdown begins — CJI Chandrachud's retirement date of November 10 is now five weeks away, with multiple Constitution Bench matters pending.
By the numbers
- 8:1 — Majority in the 9-judge industrial alcohol verdict (same margin as the mineral rights case)
- 90% — COC approval threshold for Section 12A withdrawal from insolvency, as affirmed in the Byju's ruling
- 3 — Priority 1 articles from a single week — the densest period since late July
- Article 17 — Anti-untouchability provision extended to institutional labour assignments in prisons
Looking ahead
- October 9: RBI MPC decision — potential stance shift from withdrawal of accommodation to neutral
- October 17: Constitution Bench expected to deliver Section 6A Citizenship Act judgment
- October 18: SC child marriage prevention guidelines expected
- November 10: CJI Chandrachud retirement — acceleration of Constitution Bench decisions expected
This is the Veritect Weekly Legal Roundup for Week 40 of 2024. For daily updates, visit our legal news page. Subscribe to receive this roundup every Monday morning.
Veritect provides this content for informational purposes and does not constitute legal advice.